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Sunday, June 24, 2018

Air Transport Group Executing, But Headwinds Continue To Weigh

In terms "controlling what it can control", I believe Air Transport Services Group's (ATSG) management team is doing a good job. Even so, there are worries about Amazon's (AMZN) future plans for its Prime Air operations, possible competitive losses to Atlas Air (AAWW),
higher rates, and access to planes continuing to weigh on the shares,
which have underperformed Atlas Air quite significantly since March of
this year.

I expect Air Transport to expand its
business relationship with Amazon over time, but there are no
guarantees. Likewise, I believe the company's efforts to expand its
ground-based service and conversion businesses will pay off, but not for
several years. Although the overall air cargo and leasing environment
remains healthy, escalating trade disputes could threaten that and Air
Transport doesn't have a great track record of free cash flow or ROIC
generation. That said, there still appears to be worthwhile opportunity
here for those investors who can get comfortable with the risks.

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I started this blog as a way of archiving my writing for sites like Investopedia, as well as posting some thoughts on the markets, stocks, or whatever else strikes my fancy.
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